quote:

Originally posted by chellim1:

By Timothy Nash, Bob Thomas, George Lang, & Tom Rastin
.
.
.


A Sustainable Path Forward

The solution is not simply austerity, nor is it unlimited borrowing. The United States must pursue a balanced approach that combines fiscal restraint with economic growth.

Three steps are essential.
[LIST]

First, Washington must restore spending discipline.
The federal government does not necessarily need to adopt a strict balanced budget amendment tomorrow. However, policymakers should establish credible long-term limits on deficit growth with town hall meetings — a possible useful tool for direct voter input, for all members of Congress and each other. Without fiscal guardrails, spending decisions become increasingly disconnected from economic reality.

https://www.realclearwire.com/...to_kick_1171271.html

That's laughably naive of the author. Congress has never, and will never, voluntarily restrain their spending. Town hall meetings to bring credibility to long-term growth of deficits? That's increasing the debt! Long-term is meaningless, as we can clearly see from history. Congress can't be trusted to keep a promise from one moment to the next.

They are too ignorant or too corrupt to see beyond what's in it for themselves today. Not even a balanced budget amendment will work, as they will use creative accounting to get around it. e.g. Exchange government bonds for the cash in a trust fund, or use wildly optimistic projections of future revenues and expenses.

There's no way out until responsible adults take charge, and then it will be very painful.

How the feds spend is unsustainable. If it continues, there will be a correction imposed by natural consequence. It is a fact of history. I agree with PARABELLUM that the feds will prop Social Security for as long as there is amove to be played on the board. But as with all games played poorly, there will be a defeating end. Economically, the longer that takes, the worse the consequences.

Unless something dramatically changes, the exponential consequences of an improperly run budget will exceed the revenue streams and even dry some up. Printing money is the only thing left if tariffs are of the table. Printing money as quantitative easing is poison and will eventually collapse the economy. Then congress will have to choose which pig to feed. Social Security? Welfare programs? Pensions? Military? Which gets sacrificed to feed the other? My guess is none. They’ll keep spending until it all comes tumbling down.

Only question is, when will that happen? Don’t know. But it’s not today.

I genuinely do not understand some of anxiety around this topic. Trump ran on a promise in 2016 to eliminate the deficit and he is going to do just that. Unfortunately the Dems and Biden had four years to run up a massive tab. Have a little faith folks.

quote:

Originally posted by Anush:
I have been hearing that SS will be running dry for 50 years.

Fact! I’m 70, and can remember hearing this while still in High School… always going to be broke in 15-20 years.

The elected in charge ain’t going to let that happen IMO…
The federal election voters are quite heavily loaded towards the older age groups and they know that and aren’t going to disenfranchise them.

Federal voters by age.
• 18–29: 17% of all voters
• 30–44: 23% of all voters
• 45–64: 38% of all voters
• 65+: 22% of all voters

quote:

Originally posted by Fly-Sig:
That's laughably naive of the author. Congress has never, and will never, voluntarily restrain their spending. Town hall meetings to bring credibility to long-term growth of deficits? That's increasing the debt! Long-term is meaningless, as we can clearly see from history. Congress can't be trusted to keep a promise from one moment to the next.

There's no way out until responsible adults take charge, and then it will be very painful.

I think the point behind the idea of town-hall meetings is that the voters need to be educated on the topic. Too many voters are clueless and will always vote for Congress-critters who support more deficit spending.

quote:

Originally posted by Carpentermaass84:
Trump ran on a promise in 2016 to eliminate the deficit and he is going to do just that.

The federal budget deficit in fiscal year (FY) 2025 is significantly higher than in 2016, driven by higher interest payments and mandatory spending.

The FY 2025 deficit is estimated to be around $1.7 to $1.8 trillion, while the FY 2016 deficit was approximately $585 billion, representing over a 200% increase in the annual shortfall over the decade.

2016 Federal Deficit vs. 2025 Federal Deficit Breakdown

FY 2016: The deficit was $585 billion, representing 3.1% of Gross Domestic Product (GDP). At that time, it was slightly higher than the 2015 deficit but still considered a moderate deficit compared to other years.

FY 2025 (Estimated): The deficit is estimated around $1.7 trillion to $1.8 trillion (roughly 5.9% to 6% of GDP). Despite some year-over-year reduction from peak pandemic levels, it remains historically high.

Key Drivers of Growth: Growth in Social Security, health care spending, and significantly higher interest costs on the national debt have far outpaced federal revenue growth between 2016 and 2025.

quote:

Originally posted by Carpentermaass84:
I genuinely do not understand some of anxiety around this topic. Trump ran on a promise in 2016 to eliminate the deficit and he is going to do just that. Unfortunately the Dems and Biden had four years to run up a massive tab. Have a little faith folks.

Trump can't do anything directly about the deficit. He can rally the voters, but we know half the country has TDS and will do the exact opposite of anything Trump says is good. He can bully Congress, but they are in no way required to do as he asks.

It starts in the House of Representatives. Then it goes to the Senate. And then the budget goes to POTUS to sign or reject.

This is a promise he has no power to keep on his own. Congress has absolutely zero motivation to cut any spending because they get elected by spreading the money around. Remember the howls when school lunches were going to be paused during the previous government shutdown? Just look at everyone saying the seniors on SS and Medicare will vote to ensure the programs continue. To reach an actual zero deficit will require very substantial reductions across many programs. No congress critter has the nads to stand up for that.

I feel as a country we’re kinda like a family rotating payments on maxed out credit cards, while still enjoying the good life.

I’m not sure exactly what the outcome will be, but I don’t think we’re immune from a financial disaster. It seems many believe in ‘monopoly money’, it will always continue to come from somewhere.

We could do a deeper dive & get into that ‘Tytler cycle’ the lifespan of a democracy, but I’m only halfway through my 1st coffee.

Even short of another Great Depression, people can get squeezed by economic forces.

Much of the federal budget is on automatic pilot, almost impossible for a president to change or slow down.

Ok forgive me but I’m on my like 5th cup of coffee so….

While I worry about sound financial policy what I don’t spend a lot of time worrying about is the US collapsing into chaos from it. Why? Mainly because the world has forgotten what strong empires do to weak ones. It used to the the default position but now it’s off in the “nobody but Iran” (or Russia or china) would do that category.

If things truly imploded the debt could literally be erased by fiat. Shitty way to go with lots of bad historical examples but nationalize then erase the debt. Stop pretending to be a nation of givers and become a taker. Invade Canada and Mexico for oil. Subjugate whoever is necessary. We have the best geography for defense in the history of the world. Weak neighbors big oceans.

It would be a brutal departure from our past but if it’s between become the Goths or become the Incas. I’m a Goth guy. Pull out the stops let’s start the next Empire, whatever that is.

Lots of coffee. I did warn you.

quote:

While I worry about sound financial policy what I don’t spend a lot of time worrying about is the US collapsing into chaos from it. Why? Mainly because the world has forgotten what strong empires do to weak ones...

That didn't work for Spain.

The Debt Spiral: How 3 Empires Collapsed

Spain was powerful. Not exactly apples to apples though. Bad geography, bad luck, their enemies were better than them on the sea, the Armada was wrecked by lots of things including weather of all things.

How long did these empire’s survive? A long time. I certainly think it would be acceptable to not count the previous 250 years since this would be a whole new empire governed by different principles.

Like I said, I’m all for trying to fix what can be fixed. Complete collapse and we just dissolve into chaos? Not likely. Lots of folks would say let’s burn em while we got em and that could work for awhile.

I don’t think the US will survive forever, I’m just not worried about it collapsing anytime soon.

My guess is that we'll ignore this as long as we can and whoever ends up with the hot potato will have to just raise payroll taxes keep the fund solvent. Supposedly a bump from 6.2% to 7.75% will do the trick. Our debt is probably a bigger albatross than SS. Austerity is in the cards for the country at some point. That in itself will kill countless leftists according to their own logic.

quote:

Originally posted by bdylan:
Austerity is in the cards for the country at some point.

That's a British level of understatement!

The deficit runs at $1.8T per year. That's how much more Congress spends than the government takes in. Revenues equal about $5.2T, spending is $7T.

The federal government must reduce spending by 1.8T to just break even. This greatly assumes interest rates do not go up, because interest payments are a huge part of the budget. (Debt repayment is a bigger timebomb than those numbers indicate due to shifting to shorter term debt). It also presumes no reduction in tax revenues, nor an increase in spending (war, more retirees on SS and Medicare, etc).

Where can they find $1.8T to cut? That's $1,800B to be cut from the following numbers excluding interest payments which can't be cut. Using round numbers, it is a 1/3rd reduction in each category if done equally. 1/3rd cut in Veteran's benefits? In national defense? In welfare? That's huge!

SS $678
Medicare $478B
Interest on the debt $425B
Health $419B
Defense $412B
Income Security $320B
Veterans Benefits $184B
Education, training, employment $75B
Transportation $53B
Justice $43B

^^^^^
How much does the Federal government subsidize state-run Medicaid?
Medicaid has a huge amount of fraud. I would think attacking that would help a lot.

It’s too late for austerity enough to make a timely difference. The suffering and consequences would be so great the political oppositions and the antipodal media sources would stir such unrest and contention, the juice wouldn’t be worth the squeeze. Human nature, a weak culture and corrupt government will fly this plane all the way to the scene of the crash. Not trying to be a negative Nancy, but I can’t see any other likelihood. Hope for better but prepare for the worst.

quote:

Originally posted by WaterburyBob:
^^^^^
How much does the Federal government subsidize state-run Medicaid?
Medicaid has a huge amount of fraud. I would think attacking that would help a lot.

If we assume the entire budget items of Health ($419B) and Income Security ($320B) are Medicaid fraud which could be stopped, that still leaves $1.16B deficit to cut from the other budgets.

quote:

It’s too late for austerity enough to make a timely difference. ... the juice wouldn’t be worth the squeeze.

Oh, I DO think the juice would be worth the squeeze. If there was the courage to do it.
But there's NOT, so the rest of your post is probably accurate. Human nature, a weak culture and corrupt government will fly this plane all the way to the scene of the crash.

"Americans will always do the right thing, only after they have tried everything else" is a famous, often-quoted sentiment, typically attributed to Winston Churchill, though not documented.

Let's hope it applies.

I also think the juice is worth the squeeze. I have zero faith that human nature in a weak culture governed corruptly will conclude similarly.

They will raise the retirement age, or print a gazillion dollars out of thin air (effectively stealing a little bit from everyone that has any USD). More likely, both.

Problem solved ... sort of.

quote:

Originally posted by bigwagon:
Since the rallying cry of "tax the rich" is so popular, I can't believe they won't raise the cap on earnings.

I also wonder how far out the projections go. From what I understand, the Millennial generations is huge, almost as large as Boomers, so once that generation mostly dies out, there should be plenty of workers to pay for Gen X (me!). The thing that does suck, is that the insolvency is projected hit just when Gen Xers start to become eligible. Typical. LOL

Double or even triple the cap, and allow anyone paying in to double their own contributions (voluntarily) in exchange for higher checks when they’re old enough to collect. They COULD solve this in about an hour, if they wanted to, but for now the great-elected-fearless in Washington will continue to milk this “debate” for as long as they possibly can.